Salary to an account - not in hand

Paying salaries illicitly will soon become more difficult. After the beginning of July, the payment of salaries in envelopes will no longer be allowed; instead, salaries must be paid to the bank accounts indicated by employees.

Illicit salary: EUR 270 million. Unpaid taxes: EUR 70 million. These were the figures five years ago in the hotel and restaurant sectors. Current figures are likely to be considerably higher. A sizable underground economy also exists in the cleaning sector, for instance.

After the beginning of July, the payment of salaries in envelopes will no longer be allowed; instead, salaries must be paid to the bank accounts indicated by employees.Some exceptions will be allowed, since such individuals as asulym seekers may not necessarily be able to open accounts due to the lack of the required documentation.In these cases, companies must include a receipt with the signature of the employee in question in their accounting records.

Amendments disallowing cash-in-hand salaries have been made in the Employment Contracts Act and Accountin Act. In the event collective labour agreements include different stipulations regarding salary payment, these Acts will supercede them.

Much ado about nothing? This change will not eradicate the phenomenon, allows PAM expert Sirpa Leppäkangas whose job entails the following of underground-economy indicators.

 However, this change will have an effect at least to some degree, since the opportunities for supervision will increase due to the fact that receipts on salaries must exist. According to Leppäkangas, the "salary to a bank account" principle is just one step forwards, with many more to come.

Eero Lindström, labour market director at the Finnish Hospitality Association, agrees. He says the complete eradication of the underground economy would be impossible but that "does not mean that giving in is an option".

 The most efficient method would be to focus inspections on potential targets in accordance with risk assessment due to the limited nature of inspection resources, he says.

Envelopes change hands where cash is common anyway. Salaries are paid with money that does not show in accounting records.

Currently underway is an amendment that would necessitate the provision of receipts for customers on all purchases and services.